if you don't worry about what happens in the market for tulips or real este then you're not worrying about the price level and you are risking very volatile economy and given what we learned during the great moderation, you don't wanto risk that because volatility in the economy depicts growth and we are struggling with that toy as well as the very large losses congressman oster has pointed to. now,so that was the easy part. thehard part, and eerybody here on he panel has been wrestling with this. how do you design what i will call -- i love these fancy terms of a can't resist, dampers of price activity. how do you build i a wy to cool thin down? when i go back to the first point and that is an awful lot of people don't want to see that happen. they want the bubble, they want

the volatility, they want things to happen. it's no fun if the market goes to the eqilibri every morning and nothingappens during the day. so there is a big intrinsic desire for the bubbles because they desire -- the dr. people's wishes for effortless wealth enhancement, and its action i work at a hedge fund. that's action. it can be difficult to dal with and it can be very problematic because think of it here is poor john paul said in 2006 seeing what everybody sai. they thought it was a huge bubble building and real-estate, and i was agonizing over how can i profit from the collapse in real-estate prices th i know iscoming. it's not easy to short real-estate. and the answer is well, you ago goldman sachs and say can you

write me of a derivative security here? hose value will beenhanced if the real-estate markt collapses,nd can you find somebody to sell that to me? i think that this totally legitimate actiity. it may hav beenthat the realstate bubble didn't collapse and those contracts would have expired worthless, but of course theproblem is when somebody takes the other side of he bet and they desn the instrument that will be highly profitable, secure is john ulson running a hedge fund and he wants to have an instrument if the housing market collapses. you can't go out and buy that kindf thing in the marketplace very easily. and so you go to a sophistated financial boutique and sy plse design me such a thing and they do it. and then it's essentially hedging and youollect a fee

for it. it's very tempting for people to take the other side of the bet. tempting for them to say all i havedo is offer a guarantee that will lose value if the reistic market collapses and i will get premium paid up front, i will get a bonus paid up front sohat is aig and the others. of couse it di't work out very well and the bubble did collapse and john paulson made a lot of money and the people who ha insured against the defense had been bailed out by the government. so, how do you,again, going back to theway to design these in donner dustin dampers, how do you avoid that problem? becae yocould have hada number of the things that have en suggested here in place and it's still difficult to avoid the ingenuity of the financial sector in designing other instruments. i like congressman foster's desi which is a very simple

one r the using market, which says less leverage as the price goes up. that seems to me to be very sensible. here again, the political problem as you know better than i come is the people like to dream about the value of te housing tripling in three years even fter they have been inconvenienced by its collapse and so the way you answer those criticisms, the way you build these endogens dampers is you say we re buildinghese things and you eed to do it for most asset prices. we will have these things that will make it more difficult to push the price of gold ever higher when the ice of gold goes p, the price of hoing and housing is ever important because it is part of tt, much more part of the social factor than tulips or gol but if you control housing and you don't control other things you will get buckles elsewhere and you alwaysave the first round of fact, thtis when you come in

and articulate the bubble damper, and th was stan fisher's experience en you articulate that it will be very unpopular because it is the change i the rules and it has big generational consequences. but if you were going to design these things you have to ork your way through that and say all right. this time it's come in for th first time. but if we are going to stick to it and if the dampers if the endogenous dampers are in place and everybody knows about them, then when that ipart of e architecture tat determines prices and it should help. i ner say will butt shoud help the oscillation in prces that are rise in some of these bubbles so again you need to be aware that people who love bubbles but the cos can be substantial. ifhe volatity prce can

invoke cost of the system both in terms of the turmoil and affected more volatile priceson growth itself because resource allocations, highly distort you need to try to neutlize your policies. i think ople have mentioned the heavy preference. it's ridiculous to have homeownership be sigled out as a unique way to accumulate wealth which the tax system does. other countries, canada among them have people have homes and they don't have special tax preferences and actually they ve less abubble activity in the real-estate sector as we saw with canada's experience in the st crisis. so and i think last week sheila bair actuay mentioned this among e list of things that might be doneand that is maybe we shouldn't say we're going to get you all kind of inentives to tie up your ealth.

you can either rent or buy and you buy a home cause it is a place to live. and the value -- as i think over the long run the price of housing doesn't allow thethree fast but it scillates a lot. that may not be desert so you may need to ddress that problem.

what ithe role of the policymaker? should you use rules or discretion and to some extent the rules i think are useful because they prannounce the intent to damp bubbles but there probably will have to be some discretion. the markets are tricky and i think the way to introdu the rolef discretion is r the central bank to include in its specific astment the avdance of large movements in asset market prices that are disruptive, and i know that is hard to define. t at the central bank says we are not goingto ignore them, thk that is a big step in the right direction and probably a sufficient condition for dealing with some of these issues. so, i certainly don't think- it not a simple problem, but and

the problem will probably persist because there are enty of people who like bubles, but on he other hand i think the policymakers can take st by not removing themselves from the position of addressing bubble behavior, especially with respect to re estate, but other things as well. the stock market is important, is an important asset as well and let's face it-- the central bank does respond to the stock market and if the stock arc it went down 20% tomorrow, the fed would react. or, but then it has to be symmetric, aga like some of the circuit breaker rules. if the market goes down by 10% then we shut down the market. whatf it goes up by 1%? that is okay. again, you want symmetric to symmetric rules. i amot sur but i think more about foster's rule about

whether you shldn't allow asmetric response, that is, when prices rise and fall, should the response be symmetric and i will leave that as something that can be in t question-and-ansr period. those are my thoughts and for wh it is worth-- i am still willing t bet we will always have bubbles. >> thank you john. i told you i thought we had an outstanding panel and you can sethat i was right. i nt to give each of the panelists a chance either to expand upon something that he said before or take up ssues raised by other speakers. i think will just go right down the table here. so, further comments. >> i guess i would like to ay first of all that i am rather encourage. this wasn't immediately blasted out of the water. i think that the goal doesn't have to be to complely do a perfect job of killing bubbles.

if we had just reduce the size this bubb by a factor of two, the amount of human misery that shows up in my office every single week would be enoous we reduced and i think we owe it to everyone to do our bto try to prevent a recurrence of this. i think that politically the time to do this is actually now. what we are trying to do is put into place a mechanism that removes the punch bowlthe next time the party gets rolling, and th is advantage of a formula. you agree on the formula aead of time and then it kicks in automatically, and right now if you put it into place it would do nothing in all market in the united states, because if you ok at the four year differences in prices or the three-year difference i price it is negative in all markets. actually an answer toyour question that is why i did not ever let it go below the 10%, the fixed number that i took in there. i thought about it and went back-a-forth. advantage of letting it go negati is that the feedback

loop stays closed in engineering speak. if you allowed to go negative but the reason to not let it go negative is just the risk of having at some point it will drive the down payment to zero or below oh, whter that means them i guess we explored what that means. it is pretty bad. but, anyway, soas i say i am not discouraged. ilook forward to the rest of your comments here. >> thank you jay. >> i jt want to rhaps i am sitting here thinking about the kind of things i deal with on a y-to-day basis. fha issues and also e issue of what changes do we make in this environment that sort of freeze their credit situation is little bit too tightl that we know mistakes were made, how then do we correct it without sort of grabbing the system at sort of a peak of one pointand just sort of grabbing the pendulum a far arc and say

okay we want you to stay there because that's them minimizes risk. we all know there's going to risk going forward but as a look at this i still come back to when we see what is going on in fha and some of the debate are we just trying to look at that down payment increase to what was the oposal, 5% i think, the debate surrounding that is that there is going to be i think a strong political and supposed to economic component of this argument going forward and i have to say you are more the expe and that than i am. >> i am new at this game. i have been in politics for two and a half years now, so vy different than physics. [laughte >> john, i want to say allan has the logo of the flying thing when you had the acronym esd, endogenoustabilizing factors. i ink need to run with that. >> i am going to pass for now. >> during the course of this

panel, it was great to be able to sit here and listen towhat all my colleagues had to say because they havebeen extremely valuable and insightful. secondly i kept thinking about our experience th this economic pressure and comparing to e u.s. airplane piloted by captain solon berger that ditched in the hudson river a couple of years ago. and, people talked about that water landing as a miracle. the plane was hit by a bird. it landed in water and eveone was ved four captain solon berger was a hero. the more i thought about it i started to distinguish between what i thought was a miracle and what i thought was just good engineering and good taining d good practice, and i think thmiracle that took place that day wa the plane had enough air

speed. the second miracle was that, when the plane was put down on the river, there was no river fic they got in its way to create coalition. other th those two miracles, the rest of it was good engineering by training. the plane was designed to be ditched in water and survive. in fact the landing was n automated laing. it was not a manualanding as i understand it. the crew was trained in a water landing not to open the doors in the back of the plane because the plane would sink. they were trained to open the front doors and there was all this protocol. the the plane is designed, the crews trained in theeality is once they got to the river they didn't have a at to head. it all went according to engineering. that perspective really shaped my view on sort of what economists and finance people need to do to do a better job of regulating and establishing

economic policy and financial policy a regulatory policy and it was really behind my view that the national finan office of financial research really needed to be encompassing a broad range of disciplines tha are notypically brought to be on these issues. and i would say that congressman foster's prentation was a od confirmation and reinforced my view that we can deal with what we are perceivedo intractablproblems but we have to throw out our et wider when we look to disciplines who can help us understand te bomb and on and how to respond. >> thanks. ma. >> one question for the congressn. do you think your prosal is legislation are part of the regulatory framework? >> well, it conceivably is th federal reserve which as understand it has rather broad authority to set nationwide mortgage origination standards.

it could very aggressively interpret its legislation on the books to saythat bubble regulation ipart of consumer protection and do ithat way. my guess is they would wat some encouragement from congress in terms of specific enabng words. [laughter] the problem wi the feder reserve, eveone, it is common now to beat up onhe federal reserve for the monetary policy that drove part ofthis. my view of that is that the problem is they wereying to regulateo variables with one control, adthey saw their job as we have one control which is monetary policy regulating interest rates and what they actually needed were two joysticks, one of which would be monetary policy, the other one r example loan-to-value or more generally mortgage origination standas and to control two varables, the inflation rate and the bubble, the housing price bubble, and under those circumstances ou can actually design feedback

loops that control two burials-- variable simultaneously but you need to actuators to do it. i think tt is what israel is doing and that is what china's doing. when i first s this in the context of china and they were stimulating their economy and doing everything they could to get continued vestme in industry in china, they are worried that by pressurizing the whole system with money thatt would pop out as a housing bubble, so what they did-- you can clearly seethat china is beg run by engineers. actually if you look at the cv's of everyone in chi, we are going to pressrize the system. we don't wt it to come out of the housing bubble so we are going reinforce housing by turning up the mortgage origination standards which is also what israel has been doing. i am very interesting and what the results will be in those markets, because among other things that will be a calibration sample we will see what is the effect of a 10% change besideshe political uproar. maybe it will have whatwill be

a faly predictable effects on bothrices and volume in the real estate rking could be very valuable. >> we are still a long way from th50% down paymentof 1913. mark, we are coming to the question period and i'm going to ask the first question. mark, could we get you-- stephanie i would like to go backo a slide. it is the one called the cyclic gray adjusted capital buffer. is it too much trouble to get out? because, what i'm going to ask you marked when we get this- how hard is it, stephanie? now can we get to the one-- it isage 7. thatne. mark, isn't this another example of an effect, a counter-cyclical

down payment requirement, where the down payment is the tal of the bankinsystem as opposed to the capital of the mortgage borrower and itead of telpd of the borrower we simplyhave to levage our system of the banking. isn't this really the same idea? >> you, i think it is. it doesn't make a ditinction as i said earlier beeen assets or e assets of the banking system because it is very likely that the next couple will be housing, because of what we have been through and what it has do to the regulatory system in the banking system, so the next problem could be somewhere se. we don't know whe, but this would be-- addressed that in the same kind of framework but it is just broad in context. again as i pointed out earlier, it hs to be i think global in its orientation, part of the global capital standards as opposed to the u.s.. >> thank you. we have come to your estions

and let me remind you how this works. we have a microphone. when you arecalled on, please wait for the microphone. when you get it, tell us your name and your affiliation and then ask your question. if you fl an overwhelming urge to make a statement instead of asking a question, you must ep it brief for the chairman will cut you off right here. i am bill waton and i will try to make my question into something other an a statement. you know, the seminar starts with we have managed to survive the first thing of the giant real estate bubble yet i am real more concerned about where we are now, whether we are going to survive the policy response to te last bubble. we have had some great interesting and i think affecte theoretica responses to stopping a bubble but does anybodon the panel believe that the dog legislation o any

other thigs being proposed in congress will address any of the ings we have talked about? i don'see anything in the current legislation that talks about the fasb and accounting rules and that procyclical effect they have or are rating agencies not really being uch much and fannie a freddie are not mentioned in the lislation so i am just wondering whether we will survive the political and poli fix we are facing in 2010? >> somebody want to take that one? hn. >> well, i think the answer is, i don't think, not only is the legislation not addressing the problem of the response to the problemsince the lehman crisis , probably has reinrced the determination of those who take isks in the real estate market tcontinue to do so. again, you know, the baward

looking 's very hard to do but it is arguable that some of the people who are supplying insurance and i don't want to be too eser here, but basically people involved in keeping i run-up heaven billy-- real been punished and i don't thk you have to meet out punishment, but if i am running that kind of an organization, i think my sort of pragmatic dgment is we should get back tohis whole thing quickly as we can. the rating agencies are another issue. we have had a session on that that alex design. i am amazed that they have the chutzpah to start offering greetis. today they just downgraded greaserom triple-a aaa to trle the.

that franchise needs to be dissipated, and i hope congress will do that. so yes, and i'm glad you brought that up because as we all finied, inerms of what the official resnse has been to this whole pisode, it is not in my mind very encouraging that we won't see it again. >> bill that was the political question. >> well, just to pick up on one thing that i think will have a huge impact and would have prevented a big part of his bubble is the securitization skin in the game, which is principle on the senate and house side that if you are going to securitize, bundle of this stuff and sell it off you have to eat a fraction of what you cook. this alone with-- would have just about put outall the mogage originators and the unregulated pipeline that generated so much of this toxi paper and all those people would have been put out of buiness almost immediately if they had to eat a fraction of what they

were cooking and that is just one example of many things that will contribute i different levels and preventing a recurrence of bubbles like this. >> i would like to take a different view. i thinkthe legislation is pretty good. i man if i wereking for the day i wouldn't have it exactly the way it is, b i think it will make it less likely that we suffered the same kind of excesses in the future and that it will mitigate the severity of future financial crises. in the regulatory response, the legislive respon is only part of it. there's also a ignificant regulatory response. solvency are proeding quickly and they are veryubstantive in combination with the regulatory reform i think will make a difference. let me just say in terms othe legislative resonse, i thin the changes in the resution press are good. i ink that makes a substaive difference. i think that makes it less

kely that we will suffer lehman like prlems in the future. i think the csta is a good idea. i think it gets the int that we need to regulate that are at point ofrigination and they will be focused onha particular issue. i disagree with skin and again. i don't ink that will make a difference at all congman, because they do about the initutions that failed. they had a lot of skin in the game. bear stearns, lehman brothers, they ate everything ty cooked and they still made the same mistakes, so i don't think 5% is going to make a difference bui think if you say, you know, are worried about dti or worried abouyour credit score are all thosethings, certain minimum standards. >> we can all debate this a long ti but i'm going to take us to the next question. we have got a range of opinions out here.

please, the gentleman up in th front. >> i thought the panel was outstanding. i wanted to come he question of let's assume for a moment that the regulators in the united states identify a future mar systemic risk. you have this oversight council, which is essentially staffed among elements of the federal reserve or staffed from that. i am chaired by the treasury. don't we have built within that ructure, and i agr we need an oversight by the to bring the regulators, the leading retors together to have th discussionnd debate about whher we have a bubble and if we do have a ubble what to do about it. is a very fundamental problem we continue to face, namely that the feds didn't really ret top early lee in the past and though we have a treasury, whmever that may be, whose political

benefit maybe not to recognize the new legali which is the next bubble? >> am i want to let you take that one because that is right on your projec here. >> thas for the question. i couldn'tave asked for a better one. you ve articulated the central problem, for few score pages in this bill that runs to a few thousand, if you sit andead e seion on the office of financial research you will e in fact, i would say a perpignan change and i'm using that word deliberately, because the office of financial research has no regulato authority other than to coel and said data standards and to collect data that has never been collected by the government before in terms of granular transactns and to build analytical capabilities that no one in the government has done before, to build the research effort at no e has

undeaken before. and everything about this office is structured to create in effect a systemic risk monitor, with absolute mplete independence. that budget of the ofr is set by the director the director is the presidential appointee with a six-year term who serves for aerm nt at the pleasure of the present. the officer sits in the treasury department that hs a level of independence which is unequaled by any one you can find in governme to ensure the absolute honesty, accuracy and best efforts on the part of what they assess and report to the financial stability council in the congress a to regulatory community. that is, if you are awre of for exple the rules for testimony, e secretary of teasury want to go up and testified before the congress of the united statbecause he is invited to do so we ca open hi mouth without getting approval from the statement from the office of management andbudget.

the statute specifically prohibits anyone from having prior review or approval of any testimony or statement by the direct of the office of financial esearch, so you have here an office tt will collect data that you have never seen before, conduct research you have never seen before, who has a standi that is independent. he is able to et his budget or shis able to set her budget, raise the budgetary funds from assessme on the large reporting firms and then report eir best assessment of whether they are looking backwards, sussing previous problems and providing the best judgment on why or forecasting going forward what problems are emerging a what ris needed to be responded to. the way we describe e fi of final resourcin the tradition of a biblical profit, speaking truth to power and everytng about the office is structured to reinforce the speaking ofsolute truth.

>> thank you allan, and one of the things allan said that i want to reiterate because i think it is probably the most important element is this office has no regulatory power, so it n't--power corrts as we know no matter what form it is exercise. >> it n't be orrupted by having to justify past decisions and actns. >> thank you. a question rig here. >> korbin daily frters. i want to asthe congressman about his proposal, to step back a little bit. basically wh you are talking about is making it harder to buy a house and putting more money up front. i'm wondering a is this politically feasible and b are you really saying begin a neds to rethinkhe american dream because the house is so different and should it be treated differently or should it eat the same? >> i think realistically, we are

rethinking all of our housing pocy. everyone on both sides of the aisle politically. we made a mistake i think in the last probably two decades, just deciding, tryi to push people into hses that were bigger than ey could afford an earlier than they could afford and i think most everyone recognizes that. i think one of the tings we are going to have to do is to focus on doing everything we can to make sure that people do have that 10% down or 20% down and make them the big push before you t them into houses. my private belief, but i think itis shar ba lot of people on both sides of the aisle. that is separate from trying to do something about bubble there are countries that have just 20% down and some fid numb down an they still have bubbles because of this flipping mechanism that still exists. to defeat the flipping meanism, i tink that is where you want a proactive feedback

loop too bad nd that is really the key element there. >> let me say couldn't gree more about the necessity of the dynamic. reacti to the asset price behavior next questio right here. >> kevin galanti, ecomist. i think if you took all of the econom talent inthis room and put them to the task of stopping bubbles that would stop 20 of the next 30 bubbles. you move back to the other end of pennsylvania avenue maybe it would foster 20f the next three bubbles. but the feedback mechanism that you escribe sed to be called in the old day when we had-- market discipline. that is what markets were supposed to do. so really, the question that you have posed is, should we-- we didn't have market discipne i thisast bubble.

should wego back to market discipliner can we rely on what stonesup sounding like a lot more of the same, that we had egulation, a lot of regulationthat were in pce it didn't work but we still believe in it. we still believe that political oversight of regulation will prevent the next market bubble even though it didn't in the last one. why should we believe that i guess is the question? >> anybody want to takthat? >> you areright tobe skeptical, as i am. and i think though that you asked the queion why didn't market discipline operate in this particularbubb, but i think with respect to all bubbles,e ask that qution. so, i guess it is really a case of asking, should we intervene in the market? i am always reluctant to do that, but i would say in this case, we have either need to, in

the case of owner-occupied real estate, the government has already inteened very avily in the market to favor that activity, so either you have t change that or createome offsetti mechanism lie the dynamically upgrade down pment so, i think there is a good reason. if there is already distortion it is nice to get the distortions out. i have-- i would suggest trying to overlay it wi some kind of constraint on mortgage financing. one other comment though about thfinancial system. you know, we still have to get away from a system, and i don't really think we have done that with this ne ll, one of our most basic objections to i has

to do th the so-called volcker rule which has been alluded to in a different way. we still, am guessing i don't know but i am guessing wewill end up with a system where institutions that have government insur deosits will be able to utilize very high leverage in the financial sector. and i am a very old-fashioned guy on that. if y want to be a smart speculator that is fine but the vernment should not be insu your deposit base and i really think we have to get away from that before we kind of cut the link between the financial ran bbbles. >> when we talk about the financial sector and the so-called volcker rule, as i have said set on other occasions we have to remember that a lot more financialinstitutions have gone broke in the old-fashioned business of making loans, specially real estate loans then they have by trading on various

markets. ng on. there is a question right here. >> this question is for you congressman foster. do you have any times for when this proposal might be introducedncongress or the feral reserve? [laughter] >> no. that is the short answer. right now i up to my eyeballs dealing with the confereing of the bill. ended up being sevenfor seven and getting my amendments adopted into t house version so as we are trying to eal wih the endgame of trying to match those with the satright now. so, this is going to be the next session of congress. i think my intenon here was to just start in this conversation and to sta the academics in particular looking at the results in israel and china of these experiments, and seeing if

there is a powerful lever here that we should tart giving to someone wise or some wise formula to start anipulating. because the simpleminded monetary poli regulating inflation just allow this emendous tragedy to develp outside the field of view of the federal reserve, so i would be thrilled if this happened in e next seson of congress. >> but you d see-- [inaudible] >> certain. >> with that very short question and answer, i want t say that the idea ofcreating the idea, which will in the future become the reality is what aei is all about and we are delited with this discussion. unfortunately we have reached 4:00. i know that membe of the panel will be wllg, if they have a little time, to talk to you

informally afterwards. thank you all very much for coming and lets thank our panel. pplause] [inaudible conversations [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> in number of oil company ceo's will be on capitol hill testifying this week. this mmrning, we will hear from the ceo's of exxon, shell, and that begins on c-span 3. thursday, bp ceo tony heyward will appear on the bp role in the oil spill. live coverage is that o'clock a.m. eastern on cspan 3. for more information on the gulf oil spill, visit our web site c- span.org/oil spill.

president obama made his fourth trip to the gulf coast yesterday following the april 20 explosion on the deepwater oil exploration rig. he ended the day in florida after visiting alabama and mississippi. he returned to washington for an oval office address. >> a number of our elected officials are here. it is from this staging area

and 1600 like it across the gulf coast that our response to the oil spill is being carried out. i saw what is being done to repair and decontaminate boom, to train volunteers, and to help with the cleanup efforts. the hard work and sense of purpose on behalf of the people of alabama as well as the gulf coast is inspiring. i had a chance during discussions with state and local officials to reiterate to them what i have been saying across the coast and that is that we want to coordinate at every level, federal, state, and local, to make sure we are leaving no stone unturned in terms of our ability to respond to this crisis. what i heard from a number of local officials today is what i have heard from books and each of the four visits i have made to this region since the deep

water horizon an explosion happened in april. there is a sense that this disaster is not only threatenin+ our fishermen and shrimpers, not only affecting precious marshes and wetlands and estuaries and waters that make the gulf coast so special, there is also the fear that it can have long-term impact on a way of life that has been passed on for generations. i understand that fear. governor riley understands this. he has been a regular presence on our calls and a relentless advocate for alabama throughout this process. we are absolutely committed to working with him and the local officials behind us to do everything in our power to protect the gulf way of life so

that it is there for our and great-grandchildrenhildren%- everybody here has had experience dealing with disasters. we were flying from mississippi by helicopter and you can see the buildings that were decimated by hurricane katrina. in some ways what we are dealing with here is unique because it is not simply one catastrophic event. it is an ongoing assault whose movements are constantly changing. that is what makes this crisis so challenging. it means it has to be constantly watched. it has to be tracked. we constantly have to redeploy resources to make sure they are having maximum impact. we also need to make sure that we're constaatly helping folks who have been hurt by it even as we are stopping the oil from spreading into more and more areas. that means that this response

effort has to happen on many levels. we have to contain the oil as quick as we can bury it after seeing an oil collection plant from cbp, we went back to them and say they need to move more faster and more aggressively. they have come back a plan to accelerate steps to contain over 50,000 barrels per day by the end of june. that is two weeks earlier than they had originally suggested. the revised plan also includes steps to better prepare against extreme weather events and other unforeseen circumstances in the months ahead, addressing another one of our concerns. we will continue to look bp and other responsible parties accountable for the disaster they created. dealing with the aftermath of this oil spill means protecting the health and safety of the folks who live and work here at the door in alabama and off the gulf coast. -- here at theodore and of

the gulf coast. i had seafood for lunch and it was delicious. we want to make sure that the food industry down here as much protection in desertification they need to continue their business. this is important for consumers who need to know their food is safe but it is also important for the fischers and processors who need to sell their product with confidence. seafood from the gulf today is safe to eat. we need to make sure it stays that way. that is why areas that are likely to be exposed for oil, the fda and the national oceanic administration are increasing inspections of seafood processors, strengthening surveillance programs, and monitoring fish

that are caught outside of the restricted areas. we are coordinating our efforts with the state to are implementing similar plans. this is on top of steps we have taken to protect workers involved in the cleanup efforts. part of the training you observed today involves making sure that workers are sticking to the protocols that were put in place. when they are out there on the water or working with sensitive materials, we want to make sure they are taking that seriously and not cutting corners on safety. we don't want tragedy's on top of the tragedy we already see. officials from the occupational safety and health administration are inspecting staging areas like this one. they are boarding vessels off the coast to make sure that bp is complying with safety obligations. if they see a problem, they will work with bp to resolve as quickly as possible.

we are also monitoring air and water across the gulf coast for hazardous chemicals and pollutants that could endanger workers or anyone else so we can act swiftly should any health risks arise. these health and safety measures are part of our overall effort to deal with the oil spill. all in all, we are confronting the largest environmental blaster in our history with the largest environmental response and recovery efforts in our history. over 27,000 personnel are working to safeguard our coast and protect endangered wildlife. more than 5400 skimmers, tugs, barges and other vessels are currently responding to the oil spill. over 2 million feet of containment boom and over 3 million feet of other boom are being deployed. we have authorized the deployment of 17,500 national

guardsmen and women to sit in on the response effort. so far, only about 1600 have been activated and the rest stand ready to help whenever our governors choose to use them. across the gulf coast, guardsmen are supporting local, state, and federal authorities in a number of ways, from reconnaissance to this material training. aircraft are already assisting in response. in alabama, national guardsmen have received special training to deal with claims processing. to put it simply, this is a multi-purpose force that is prepared to handle almost any challenge. i hope our governors put them to good use. the full resources of our government are being mobilized to confront of this event.

it is not only important for everyone from the federal government down to do all we can, but is also important for us to work together to make sure our efforts are well coordinated. governor riley and the other governors have been on the phone is 7 days per week. we will continue to work hand- in-hand with state and local authorities from containing as much oil as possible to protecting our coast until we put this tragic ordeal behind us. i cannot promise of folks in theofore and across the gulf coast that the oil will be cleaned up overnight. it will not abate. it will take time for things to return to normal. there will be harmful effects on many local businesses. it will be painful for many folks. it will be frustrating and some

folks will be angry. i promise you this -- things will return to normal. this region that has known a lot of hardship will bounce back like it has bounced back before. we will do everything we can 24- 7 to make sure communities get back on their feet. in the end, i am confident we can leave the gulf coast in better shape that was beeore. governor riley, i appreciate your efforts. let me make one last comment about our coast guard pand at about our national and support better, thad allen. he is about to retire and enter the call on behalf of the country. he is working as hard as anybody in the country to help deal with this crisis.

members of the coast guard have been doing outstanding work each and every day. i want to say to all of them that the country as part of you, and grateful to you, keep up the thank you very much, everybody. [applause] i want to take this one question because there have been reports into it news. i will be meeting with the bp chairman and a number of officials on wednesday. we have begun preliminary conversations about how to restructure a mechanism so that the legitimate claims that will be presented, not just tomorrow or next week, but the coming months will be dealt with justly, fairly, promptly. so far, we have had constructive 13 far, we have had constructive that by the time the chairman

and i meet on wednesday that we have made sufficient progress. it is too early at this point but by wednesday i hope we have some -- have made some progress on this. [unintelligible] i will let thad allen address this because we talked about this during oor meeting. >> we have a number of different types of skimming equipment. we have others that are towed and employ closer to shore.

they have become the major resource to fight this. we know what we are doing near the well head. we have to do maximum skimming near the shore. we have over 400 skimming vessels. our goal is to take the smaller equipment that is flexible and put it on vessels of opportunity and coordinate better with their local and state partners. >> you will only get two questions. this is an issue that has come up across the gulf. keep in mind about vessels of opportunity could range from a large boat to a little recreation but.

oat. each of them will have different take skimming equipment of the sort that admiral allen discussed and place it on the boat. maybe they can act as sentinels to spot oil or maybe some of them are shuttling supplies back and forth to these ships. we are taking an inventory now of all the vessels that have presented themselves to determine which ones can go out to in deep water. they have radio and full equipment and can lay out boom, they can engage in scanning, which ones can do that and that process will be coordinated. keep in mind, we have to do this across four states. that means that at any given time the priority might be that we want to get stop about 20

miles off the coast are you may not see skimmer's because every week -- every resource we have will be deployed. one key point that we'd made is the regional incident commander. we have to make sure we have a full inventory and know exactly what the status of each of these boats are. we make sure that people are being trained and are matched up. folks are trained with these vessels and we need to put them to work as quickly as possible. all right? >> [unintelligible] >> i have seen a number of beautiful beaches in mississippi. we saw some beaches flying over. i will be honest -- we will stop as much of the oil as coming in

as possible. that is our number one job. it turns outtthat if the oil hit the beaches, that is probably the easiest to cleanup. it is a concern for tourism and the entire gulf region that economically depends on a tourist season and this is a time when people are out of school, but those beaches will recover because those becauseglobs of oil, we can send people out there to scoop them up and dispose of them properly and the beaches will look pristine one year or two years from now. the biggest concern we have are the marshes, the estuaries, the wetlands where if you start seeing that oil seeping in, it can not only kill oyster beds and other vitally important seafood and ecosystems, but

even with the repair efforts in those areas can actually destroyed the ecology in the region. we have to coordinate with the best scientists we have available. thad allen is working with all the other agencies to make sure we are rating priorities in terms of areas that have to be protected first and foremost because they may have a more difficult time to recover. that means that sometimes like a mississippi they just made a decision they will not put boom from of the beaches because if the oil it's there, is dead but it is temporary. some of these other areas it could be permanent. thank you, everybody. >> tonight at 8:00, the president will address the nation from the old office on the gulf of mexico oil spill. this is president obama's first

oval office address. we'll have live coverage on the cspan network's including cspan radio and c-span.org. "washington journal" is next. we will take your calls. the house of representatives will be in in a couple of hours for a brief morning hours session. later, general david petraeus will update a senate panel on the security situation in afghanistan. our live coverage begins at 10:00 eastern in from the senate armed services committee. coming up this hour, senator byron dorgan will discuss the bp involvement over the gulf oil spill. he serves on the energy and natural resources ommittee. after that, an update on the financial regulation bill. the house senate conference committee will try to work out differences today on the two versions of the bill. versions of the bill.